On 8/26/2022, Bharat Ramamurti, Deputy Director of the White House National Economic Council, told reporters, “Our estimate is that the debt relief proposal will reduce average annual receipts in the student loan program by about $24 billion a year over the next ten years.”
However earlier this week, Penn Wharton Budget Model was larger, a reporter asked Ramamurti, “I wanted to ask you about the updated Penn-Wharton estimate, which says just the debt cancellation piece alone would cost up to $519 billion over 10 years, and then the total plan would cost upwards of $1 trillion. Obviously, there is a significant gap between the $24 billion per year that you’re assigning, or $240 billion over 10 years. Just wanted to give you the chance to walk us through why we might see that difference in the two models.
RAMAMURTI: Sure. I know it just came out today, and I didn’t have too much time to look carefully into it, but I got a chance to skim it. My view is that there’s a couple of things. Right off the top, getting to that trillion dollars, they have a massive range on estimating … it seems to be somewhat speculative and clearly the top end of the range … And look, estimating the cost of forgiving certain debt is more complicated than just looking at the face value of the debt that’s being canceled … If the face value of their debt is $10,000 and you cancel it, it’s not reasonable to say that the cost of that is $10,000 because you were sitting here collecting zero dollars on that … the Education Department has the best data on it … So we feel confident in our numbers.
Fox News reporter Jacqui Heinrich asked Ramamurti, “What’s the difference, though, between — I guess, how are you justifying using a 2003 law that was, you know, designed to help military families for this purpose, where you’re now helping bail out people who took out loans and cannot pay them? Do you view people who can’t pay their debt as heroes like those who are in our armed services and were fighting after 9/11?
RAMAMURTI: … So what are people supposed to do? They want to get a degree. They’re being told that’s the right thing to do. They think it’s going to help them —
Heinrich: Why go after the universities? Why not build in something to make sure that borrowing moving forward is limited or that universities don’t just ratchet up the cost?
RAMAMURTI: Sure. Yeah, I’m glad that you brought that up, because I want to address it. Remember, the President put out a three-part plan on this. And the third part of it was accountability for colleges.
Reporter: I wanted to ask for a second about the legal justification for this program. You’re using a 2003 law to justify why COVID is a national emergency and why student relief — or debt relief is needed. What’s your response to critics that say that that’s a stretch in the law? And do you plan or do different agencies that are involved here plan to put out more legal justification for why this is okay?
RAMAMURTI: Well, look, again, I’m not a lawyer, so I don’t want to get into too much of the legal nitty-gritty here. But what I can tell you is that both the Department of Justice Office of Legal Counsel and the General Counsel’s Office of the Department of Education have looked at the text of the statute and believe that the action that the Secretary took and that the administration took here is legally justified.
Reporter: If you — a follow-up to that: If a judge somewhere were to attempt to put a stay on the implementation of the student debt relief, would the payments still resume in January?
The other — so the other side of the coin: So if the student debt relief were to be stopped by a court, would the — would the other side of it — payments — still resume?
RAMAMURTI: Yeah, I — I’m not in a position to answer that hypothetical right now, but it’s a good question.
Reporter: … we’ve seen courts push back. In this case, you have people who are really excited and really making plans with this money that they think they’re going to save. What’s your response to them? Are you preparing for a legal challenge? What’s your response when people are reading that there could be legal uncertainty to your position?
RAMAMURTI: Yeah. Well, look, I — you know, what we can say is that we believe we’re on strong legal ground in taking this action. Of course, people can challenge actions in court. It happens all the time. It happens to this administration. It’s happened to every administration in history. It’s going to be up to the courts to decide whether those are valid claims or not. But we believe that we’re on very strong legal ground.
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WH: Borrowers are heroes in HEROES Act; our $240B estimate better than Penn-Wharton’s $510B or $1T.